Non-fungible tokens sound like the new kid on the block, but they’re really not. NFTs, as they’re commonly known, have been hanging around the internet since 2014. But it wasn’t until last year that they moved to the “cool table” in the lunchroom with a splash. In 2022, NFT trading hit $17.6 billion, with sellers making $5.4 billion in profits. Those are sizable increases from 2021 and reflect just how popular these online assets have become. In fact, Collins Dictionary named “NFT” its word of the year for 2021. As 2022 unfolds, NFTs have immense potential to change the landscape of customer loyalty and brand awareness.
WHAT IS AN NFT?
But first, what is an NFT? Part of the problem with NFTs, like anything else that’s new, is that people don’t understand them. For the past year, I’ve been immersing myself in this world to understand how the process works, what their value is and how my clients can leverage NFTs to deepen brand loyalties. However, before we get into that, you need to understand what an NFT is and why it can bring value to your brand. Most simply, an NFT is a tradeable digital commodity. Typically a piece of artwork, it’s minted and lives on the blockchain, the secure, online database that serves as a sort of digital ledger for cryptocurrency and digital assets. NFTs allow you to own something of value without having a physical asset. They’re often very exclusive and unique. That rarity adds to the value and appeal. The value of an NFT isn’t just in the asset, it’s also in what the buyer gets from the asset—and that is where you can start to build brand loyalty. So far, the vast majority of dollars dumped into NFTs has been focused on collectibles and gaming. The top-selling NFT of 2021 was created by digital artist Beeple (né Mike Winkelmann) and sold at auction for $69 million at Christie’s Auction House. While the Beeple piece was simply about the exclusivity of the artwork, other entities are building a brand around more than just a one-of-a-kind picture. In the past year, celebrities such as Jimmy Fallon, Paris Hilton, Eminem and Justin Bieber spent as much as $1.3 million on NFTs from the Bored Ape Yacht Club (BAYC) collection. One of the hottest NFTs on the market, BAYC is a collection of 10,000 NFTs that are both pieces of art and memberships to an online club. And that’s where branding opportunities come in.
BUILD BRAND LOYALTY WITH COMMUNITY AND EXCLUSIVITY.
As the buzz around NFTs grows, business owners are trying to decide how—and if—NFTs fit into their brand strategies. And the answer is they absolutely can if you find the right opportunity. When you’re thinking about an NFT solely from the perspective of “look at this exclusive piece of collectible digital art,” it’s unlikely that even the most dedicated customer will spend a chunk of money just to own a unique digital copy of your logo. But if you take a lesson from BAYC, it becomes about more than just a picture of an ape. BAYC has focused on building a community where NFT holders receive exclusive benefits and offerings. There have been meetups for Bored Ape holders around the world, including a 2021 concert featuring Chris Rock and The Strokes. Now, the brand is moving off the blockchain to partner with Adidas and has launched its own mobile game. Rather than simply creating avatars to show online clout, BAYC has used its community offerings and exclusivity hand in hand to build brand awareness.
CONSIDER UTILITY TO DRIVE DEMAND.
When developing an NFT strategy, consider what type of community it can build around your brand. What do your customers want? A discount on your product? An exclusive special event? Special merchandise drops? When considering using an NFT to help build your brand, focus on utility for your customers.